1997 (7) TMI 295 - AT - Central Excise

Summary

Issues:
Applicability of exemption Notification No. 208/83-C.E. on ship breaking scrap inputs, Burden of proof on duty payment for inputs, Competency of Additional Collector to issue show cause notice invoking extended period of limitation.

Analysis:
The case involved five appeals challenging the order-in-original by the Additional Collector of Central Excise, Ahmedabad, regarding the applicability of exemption Notification No. 208/83-C.E. to ship breaking scrap inputs. The appellants argued that they purchased the scrap from the open market and claimed duty had already been paid on the inputs. They contended that the burden of proof lay on the Revenue to establish non-duty paid status of the inputs and objected to the extended period of limitation invoked by the Additional Collector.

The Revenue, represented by Shri P.K. Jain, asserted that the show cause notice clearly alleged that the inputs were non-duty paid, shifting the burden of proof to the appellants. They defended the competency of the Additional Collector to issue the notice invoking the extended period of limitation.

Upon careful consideration, the Tribunal found that the show cause notice contained a clear allegation that the inputs were non-duty paid, mainly because most ship breakers did not pay Central Excise duty. The appellants, in their reply, claimed ignorance about the duty liability on ship breaking scrap, treating it as re-rollable material. However, the Tribunal observed that the ship breaking scrap was non-duty paid, rendering the generated scrap ineligible for exemption under the notification.

The Tribunal also addressed the issue of limitation, concluding that the appellants had misstated and suppressed facts by not declaring the true nature of the inputs to avail of the exemption improperly. Citing relevant legal provisions, the Tribunal upheld the demand and penalty imposed by the Additional Collector.

In reference to legal precedents, the Tribunal discussed the powers of the Additional Collector and the issuance of show cause notices. It differentiated the present case from previous decisions and emphasized the appellants' responsibility to rebut specific allegations made in the show cause notice.

Ultimately, considering all aspects of the case, the Tribunal found no merit in the appeals and rejected them, affirming the decision of the Additional Collector. The judgment highlighted the importance of complying with duty payment requirements and the burden of proof in such cases.